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Sunday, December 7, 2008

This market just looks like it is determined to rally even in the face of worsening economic news. I have held on to my SDS, but will dump it tomorrow if this rally continues. So many people are calling for a rally that you would think it was a trap. I still don't understand why we would rally overall. Every day we hear of more layoffs and declining sales. What is usually a recipe for disaster can't get the market down and many will tell you that is the classic sign of a bottom.

At the time of this writing, the futures are up as are the overseas markets. There appears to be a lot of confidence in President-Elect Obama's pledge of a public works stimulus. I agree that this will be the best stimulus that we have seen thus far. We must get jobs growing again.

I look for oil prices to get going again. OPEC is in an area where they really stand to lose if they don't get prices up soon. Back in the 80's it got so low they could not do much with it and I think they will act before they get caught in that situation again. I think natural gas will go up as does oil. I am almost certain that the dollar is going to fall at some point in the near future. I just don't see how it can hold up as we continue to borrow all of this money.

Sometimes you just can't fight the market---even when it seem irrational. I know that there has been a lot of smart money on the sidelines for quite some time now and the volume on the up days has been leading me to believe that some of that money is quietly beginning to creep into the market. The world is printing money at never before seen levels. Inflation is headed our way and I am still holding FLR as my stock of the year. These guys will get hurt if oil and gas continue their decline, but if they reverse, this company has everything else going in the right direction and they will be clicking on all cylinders.

I mentioned last week that we were in a dangerous area if the dollar continued to strengthen. Many of you argue that we will not be in a bad area because we are not importing so much (in terms of dollars) oil. The danger of oil causing the dollar to fall is very much alive and everyone has discounted it. The market always amazes me with how quickly it can forget. INFLATION AND THE WEAK DOLLAR ARE ON THE WAY.